Overnight the strong range support level at 1084 was broken, and ES is
clearly still trading within the declining channel that I posted
yesterday:
We can now see significant and growing positive divergence on the RSI
and MACD on the ES 60min chart though, and I'm doubtful about reaching
either the next range support level at 1070.5 and the S2 daily pivot
also there at 1070.83.
EURUSD broke out of that declining channel yesterday and broke back up
into the range above. The same positive divergences that we see on ES
can be seen on the EURUSD chart, with EURUSD about a day ahead, which is
in itself another very significant positive divergence IMO:
The Vix on the 60min chart broke just above the downtrend resistance
trendline I had drawn on it yesterday and then slid down an invisible
declining trendline there. After a careful look I've redrawn the
original trendline and am happy that it is valid. That is a key line in
the sand for today, any break above the line would look very bearish for
equities:
We are at the crossroads now in my view. A break much below here and the
recent rally will look finished, and a retest of the lows would become
high probability. The levels I will be watching today are as follows:
- ES – Break up with confidence through range resistance at 1084 –
Bullish - ES – Break up with confidence through the channel upper trendline
(currently 1089.5) – Very bullish - EURUSD – Break down with confidence through lower range support at
1.2255 – Bearish - Vix – Break up with confidence over declining resistance at 28 –
Very bearish
